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122. Trade, Recovery and Sustainable Economic Growth
- Author:
- Pascal Lamy
- Publication Date:
- 04-2010
- Content Type:
- Commentary and Analysis
- Institution:
- Argentine Council for International Relations (CARI)
- Abstract:
- Economists have long analysed and helped us understand trade, why nations needed it to prosper, and what governments have to do to reap the gains while managing the costs. The many theories they have developed leave no doubt about the importance of trade to growth and economic development.
- Topic:
- Economic Growth, Trade, and Sustainability
- Political Geography:
- Global Focus
123. The Effect of Judicial Selection Processes on Judicial Quality: The Role of Partisan Politics
- Author:
- Russell S. Sobel and Joshua C. Hall
- Publication Date:
- 01-2007
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The quality of a state’s judicial system is an important determinant of economic growth and vitality. The decisions made within state judicial systems affect the degree to which private property rights are well-defined and enforced, which is an essential building block for entrepreneurial activity and economic growth. The key link between free-market institutions, such as secure property rights, and entrepreneurial activity has been demonstrated by Kreft and Sobel (2005) and Ovaska and Sobel (2005). Bad court decisions often infringe on the individual liberties and freedoms that are essential underpinnings for civil society and a well-functioning market economy (see Dorn 1985 and others in that special issue of the Cato Journal on this general topic). In addition, decisions made within state judicial systems also have important effects on the cost of doing business in a state. Poor liability rules reflected in state judicial decisions have been blamed for high medical malpractice rates, high workers’ compensation rates, and high automobile insurance rates in many states. Judicial decisions also impact the costliness of mandates and other regulations faced by businesses. Thus, it is clear that the judicial system is important for economic activity, and thus so is the selection mechanism that is used to determine the membership of state courts.
- Topic:
- Politics, Economic Growth, Judiciary, and Political Parties
- Political Geography:
- Global Focus
124. Creating a Policy Environment for Entrepreneurs
- Author:
- Thomas A. Garrett and Howard J. Wall
- Publication Date:
- 10-2006
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Entrepreneurship is often viewed as a catalyst for economic growth. Through innovation, hard work, and a willingness to accept financial risk, the entrepreneur takes advantage of previously undiscovered opportunities for arbitrage and profit (Kirzner 1997).1 This quest for profit, and the possibility of personal and financial failure, aid in ensuring that an economy’s resources are used efficiently. Successful entrepreneurs provide employment opportunities to others, generate innovation, spur economic growth, and contribute to state and local governments in the form of tax revenue (Gwartney, Holcombe, and Lawson 2004; Kreft and Sobel 2005). Because of this perception of the benefits generated by entrepreneurship, a large literature has focused on the factors that influence the decision of an individual to become an entrepreneur and the conditions under which entrepreneurship prospers.
- Topic:
- Finance, Entrepreneurship, Economic Growth, and Risk
- Political Geography:
- Global Focus
125. Economic Freedom and Development: New Calculations and Interpretations
- Author:
- Erich Weede
- Publication Date:
- 10-2006
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- For some time there has been a debate about the effect of economic freedom on economic growth and development (Beach and Davis 1999: 10; de Haan and Siermann 1998; de Haan and Sturm 2000; Edwards 1998; Goldsmith 1997; Gwartney, Lawson, and Block 1996: 109; Knack and Keefer 1995; Pitlik 2002; Scully 1992; Torstensson 1994; Weede and Kämpf 2002). Although there is wide agreement about the stylized fact that economically free societies are richer than other societies, there is less agreement about the impact of economic freedom on growth rates. Some writers contend that the level of economic freedom affects growth, whereas others, in particular de Haan and his associates, dispute the robustness of this claim and find only a relationship between improvements in economic freedom and growth. The most recently published research on the effects of economic freedom on growth (Gwartney and Lawson 2004; Gwartney, Holcombe, and Lawson 2006) reaffirms that there are strong and beneficial effects of the level of economic freedom and of its improvement on growth rates. Looking at the published literature as well as at the work in progress by one of my doctoral students (Liu 2007), my impression is that there are two ways to strengthen the effects of the level of economic freedom on growth: first, choose a longer rather than shorter period of growth observation; second, and more important, use an average measure of the level of economic freedom rather than a single time point measure of economic freedom that refers only to the first year of growth observation. If one compares, say, de Haan and Sturm’s (2000) study with Gwartney, Holcombe, and Lawson’s (2006), then one finds that the former study uses a somewhat shorter period of growth observation, but both of them use the level of economic freedom at the beginning of the growth period to be explained.1 Whereas de Haan and Sturm (2000) find no significant and robust effect of the level of economic freedom on growth, Gwartney, Holcombe, and Lawson (2006) arrive at the opposite conclusion: The level of economic freedom does promote growth.2
- Topic:
- Economy, Economic Growth, Economic Development, and Freedom
- Political Geography:
- Global Focus
126. Regulation, Investment, and Growth across Countries
- Author:
- John W. Dawson
- Publication Date:
- 10-2006
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Numerous studies have explored the relationship between economic freedom and long-run economic growth across countries.1 One particular aspect of economic freedom that has received relatively little attention in the empirical growth literature, however, is the extent of government regulation. Determining the impact of regulation on cross-country economic performance has been virtually impossible because of the inherent difficulties in measuring the scope of regulation across countries. While a few studies investigate various aspects of specific regulations, none are able to assess the importance of a comprehensive measure of regulation on long-run economic performance in a large sample of countries.
- Topic:
- Regulation, Economic Growth, and Investment
- Political Geography:
- Global Focus
127. Monetary Credibility, Inflation, and Economic Growth
- Author:
- Roger W. Ferguson Jr.
- Publication Date:
- 07-2006
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- By now it must be universally agreed that low and stable inflation is a primary and essential goal for monetary policy, in large part because we believe it brings stability to financial systems and fosters sustainable economic growth over the longer run. In pursuit of this goal, central banks can report some success. According to the 2005 World Economic Outlook from the International Monetary Fund (IMF 2005), consumer price inflation in the advanced economies over the decade beginning in 1997 looks set to come in at an average annual rate of less than 2 percent, down from 3.5 percent for the previous 10 years. The IMF figures for the United States show a smaller but still substantial decline in headline inflation, from about 3.75 percent to 2.5 percent. The drop in inflation for the nonindustrial economies has been more striking, with average inflation falling from double to single digits.1 As someone who started work as a monetary policymaker in 1997, I am happy to acknowledge the accomplishments of many policymakers at the Federal Reserve and in other central banks around the world. Thanks to their success in fighting inflation, the central banking profession enjoys a very high standing. And as a related matter, we might say that monetary credibility, which I would define as the perception in the private sector that central banks will do what it takes to keep inflation under control, is also quite high. This credibility is hard won, however, and can be easily lost. The Federal Open Market Committee (FOMC) at its November 1, 2005, meeting increased the federal funds rate 25 basis points, to 4 percent, and observed: The cumulative rise in energy and other costs has the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained. . . . With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability [FOMC 2005]. Unfortunately, however, the story over the past 20 years is not so uniformly positive for growth. Again according to IMF figures, growth among the nonindustrial economies appears to have increased to about 5.25 percent in the decade beginning in 1997, compared with growth of 3.75 percent in the previous 10 years. Growth in the United States has also moved slightly higher over the two periods, from 3 percent to 3.25 percent. However, growth in the other industrial economies has softened, to less than 2.5 percent in the recent decade from more than 3 percent in the previous one. This decline reflects slowing in some of the larger economies—Japan, Germany, Italy, and the Netherlands—as well as the effect of the Asian crisis in 1997 on newly industrialized Asian economies.2 To me, it is axiomatic that monetary credibility, by reducing the level and variability of inflation, lays the foundations for stronger and more sustained economic growth. In this article, I want to discuss anecdotal and academic evidence for the relationship between monetary policy credibility and economic growth and to do so in two segments: first, the link between monetary policy credibility and inflation performance and, second, the link
- Topic:
- Monetary Policy, Economic Growth, Inflation, IMF, and Credibility
- Political Geography:
- Global Focus
128. What You Export Matters
- Author:
- Ricardo Hausmann, Jason Hwang, and Dani Rodrik
- Publication Date:
- 12-2005
- Content Type:
- Working Paper
- Institution:
- The John F. Kennedy School of Government at Harvard University
- Abstract:
- When local cost discovery generates knowledge spillovers, specialization patterns become partly indeterminate and the mix of goods that a country produces may have important implications for economic growth. We demonstrate this proposition formally and adduce some empirical support for it. We construct an index of the "income level of a country's exports," document its properties, and show that it predicts subsequent economic growth.
- Topic:
- Economic Growth, Exports, Productivity, and Specialization
- Political Geography:
- Global Focus
129. Promoting U.S. Economic Growth and Security Through Expanding World Trade: A Call for Bold American Leadership
- Author:
- Research and Policy Committee of the Committee for Economic Development
- Publication Date:
- 06-2003
- Content Type:
- Special Report
- Institution:
- The Conference Board
- Abstract:
- This report presents a leadership vision of a strong and open global trading system, and urges the United States and its trading partners to adopt vital policy reforms, including delinking agricultural subsidies from prices and production while opening agricultural markets everywhere, and eliminating all tariffs and non-tariff barriers in both manufacturing and services.
- Topic:
- Security, International Trade and Finance, Leadership, Economy, and Economic Growth
- Political Geography:
- North America, Global Focus, and United States of America
130. The Political Economy of Distributional Equity in Comparative Perspective
- Author:
- Kwan S. Kim
- Publication Date:
- 03-1996
- Content Type:
- Working Paper
- Institution:
- Kellogg Institute for International Studies
- Abstract:
- Growing income inequality within a country is caused by socioeconomic factors and inadequate government policies and ultimately leads to social and political instabilities. The ideology of supply-side economics in the United States and the United Kingdom during the 1980s, for instance, induced policies of inequality which were then perceived as a way to stimulate economic growth. The demise of East European socialism since the late 1980s also led many developing countries to pursue market reforms as a way to resuscitate their moribund economies. There is evidence, however, to indicate that the distribution of income in these countries is becoming more unequal with attendant and frequently grave social and political consequences.
- Topic:
- Development, Political Economy, Poverty, Inequality, and Economic Growth
- Political Geography:
- United Kingdom, Global Focus, and United States of America